The Middle East’s new donors: rogues or team players?

Turkey and the Gulf monarchies in their savvy, if reactionary, use of aid have become important players in the international donors club.

Participants pose for a group photo during the extraordinary summit of the Organization of Islamic Cooperation (OIC) in Istanbul, Turkey, on Dec. 13, 2017. Picture by Anadolu Agency/Xinhua News Agency/PA Images. All rights reserved.With
his bullet-proof limousines at hand, and an entourage of 1500
conveyed from Riyadh in six jumbo jets, Saudi Arabia’s King Salman
bin Abdulaziz visited Indonesia in March 2017. A pledge of a billion
dollars for “various development projects” was among the
mega-deals signed. The monarch’s other promise of aid, probably of
higher priority, was for education centers to promote Islamic
teachings consistent with Saudi preferences. At the same moment, in
Pakistan, Turkish President Recep Tayyip Erdogan was calling
attention to Turkey’s aid during a summit of Economic
Cooperation Organisation, a group of Muslim-majority states (several
with Turkish cultural affinities) jointly committed to building a
Central Asian common market like that of the European Union.

Such
events highlight concerns, voiced for many years In western
chancelleries and think-tanks, about ‘rogue’ aid wielded by
autocrats. Overtly developmental and humanitarian, such aid is
regarded as covertly political. Where aid is supposed to adhere to
technocratic ‘good practices’ such aid is patently ‘bad
practice’, and poses geo-political risks. ‘Rogue’ donors
include the usual suspects: China, Venezuela and Iran. But some of
them lurk in the west’s own camp, notably Saudi Arabia and others
in the Gulf Cooperation Council (GCC): Kuwait, Oman, Qatar,
and the United Arab Emirates. In addition, Turkey, where a
faith-based political party has steered foreign aid for nearly 20
years, is by no means above suspicion.

The
Gulf monarchies and Turkey are increasingly welcome in the
western-led aid congregation

Especially
awkward for the United States – whose military and diplomatic
protection of the Gulf monarchies and of Turkey has never wavered –
was those states’ covert promotion of Islamic fundamentalism, the
ground from which so many troubles for the US and its allies have
sprung since 9/11. Beyond politico-cultural hazards, their aid also
carried economic risks for western interests. Apprehensions have
grown that new donors are using their aid to gain
lucrative footholds in markets hitherto the exclusive preserves of
western exporters and investors. In command-posts of the aid system
(IMF, World Bank, OECD) there are further concerns that their
worldwide project of diffusing market fundamentalism may be put in
jeopardy. In that scenario, cheap and unconditional loans from ‘rogue
donors’ may weaken recipients’ acceptance of ‘improved’
policies (that is, austerity and other neoliberal measures) that
western donors demand in exchange for their aid.

On
the aid stage, Arab and Turkish donors aren’t small-time players. Aid from the GCC monarchies (at least $14 billion in 2016,
up from $1.2 billion in 2000), and from Turkey ($6.5 billion in 2016,
up from $0.1 billion in 2000) attest to their rising importance. In
2016, aid outlays by GCC donors combined ranked fourth (behind the
US, UK and Germany) while outlays by Turkey ranked seventh (after
those of Japan, France, and Italy). Total spending is even larger,
since many transfers go unrecorded, especially those from the Gulf
monarchies, where elites make few distinctions between public and
private money and
where public finance is almost totally opaque.

But
have western fears been borne out? Do Gulf monarchies and Turkey use
aid in ways that violate OECD aid norms, and fuel business
competition and political tendencies unwelcome to western powers?

Over
the past two decades western donors have worked to gain the adherence
of Turkey and the Gulf monarchies to norms and rules of the aid
mainstream, and ultimately to recruit them into their old ‘club’,
the OECD Development Assistance Committee (DAC). Aid system idioms
and policy formulas are transmitted routinely through publications
and gatherings, such as the annual ‘Arab-DAC Dialogue on
Development’. Turkey, Saudi Arabia and Kuwait together with several
Arab development banks are signatories to the OECD-driven Paris
Declaration on Aid Effectiveness (2005) and numerous other statements
of resolve, which focus chiefly on technocratic matters of aid
management. Performance according to these standards seems to be
rising (OECD/UNDP
2016). When selecting recipients
and apportioning them aid, GCC
and Turkish donors behave like western donors in weakly favouring
recipient ‘good behaviour’ (especially the vaguely-defined ‘good
governance’) and in showing little regard for social and economic
rights.

Today,
having begun to sing from the same policy song-sheets, and having put
some money in UN
and other global collection boxes, the Gulf monarchies and Turkey are
increasingly welcome in the western-led aid congregation. Yet a deep
and genuine interest in management performance, and in recipient
‘good behaviour’ as defined by established donors, is not
self-evident. Of far greater interest to the Gulf monarchies and
Turkey are religious affinities, political allegiance and export
markets. Their aid goes chiefly to states, multilateral development
banks and non-state actors in the Muslim world or Ummah,
preferably of Sunni Islamic persuasions. With exceptions like
Pakistan and Somalia, countries in the ‘near abroad’ of the
Middle East and North Africa have priority.

For
the private sector, aid can be a competitive contest with high
stakes. It helps open doors to new markets for donor economies, and
is often provided on condition that recipients accept goods and
services only from the donor land. Turkey (like the US, Austria and
others) overtly “ties” its aid in that way, but the Gulf
monarchies do not, at least formally. Yet boosting non-oil exports is
a GCC priority, and aid is supposed to play its part in promoting
them. Recipients, for their part, seek aid on the softest possible
terms, especially when money
is conditional on
wrenching and thus politically risky changes of policy, such as the
ending of subsidies for fuel and food. But China offers aid without
internal meddling. Faced with that competition, Washington’s hard
conditions tend to turn soft. Aid from the Gulf Monarchies had such
effects up to 2000, but
no longer.

Today
the GCC and Turkey pose no challenges to mainstream aid’s leading
paradigms. In terms of developmental vision, they have gone along
with the UN’s Sustainable Development Goals (although Saudi Arabia
wished to see the target on ‘reproductive rights’ deleted). Yet
in practical terms their vision is probably better captured in
statements about their own development, drawn up by the management
consulting firm McKinsey – jokingly referred to as the Ministry
of McKinsey, a sign of its powerful influence in the Gulf states.

Little
of this aid was invested for productive purposes

Western
powers’ indulgence of this aid is encouraged by the simple fact
that petrodollars are routinely recycled to western financial
interests, notably
on Wall Street. The story of Arab aid fuelled by an oil rent
boom is illustrative. As revenues flooded into oil-producer
treasuries in the 1970s, Kuwait, Saudi Arabia and the UAE
began an aid-spending binge. Up to the mid-1980s they accounted for
as much as one-third of aid worldwide. It was a massive windfall for
state treasuries of Muslim-majority lands: Egypt, Syria, Jordan,
Yemen, Morocco, Pakistan etc. Subsequent research in pursuit of the
question ‘how is foreign aid spent?’ reveals that little of this
aid was invested for productive purposes. Instead, most went toward
consumption (mainly of imports) or departed rapidly as “huge
unaccounted capital outflows”, probably to offshore accounts in
OECD
jurisdictions. Recipient
countries benefited only in part, and then only for short-term
purposes; a substantial but unknown number of those benefiting were
private firms and individuals elsewhere.

Risks
remain high that their aid will not yield a lot of development but
instead a lot of debt

Might
today’s aid produce the same results, boosting short-term
consumption and capital flight? Perhaps not to the same extent,
since today both donor and recipient capacities to use aid
productively and transparently are better than 30 years ago. Yet in
the face of continuing indulgence if not promotion of secrecy
jurisdictions, the rise of high-cost ‘public-private partnerships’
and of GCC donor preference to provide loans (notorious as sources of
capital flight) rather than grants, risks remain high that their aid
will not yield a lot of development but instead a lot of debt.

Under
banners of ‘security’ western donors welcome Turkish and Gulf aid
where it might stabilize conflict-prone situations such as Somalia,
where since 2011 Turkey has taken big risks in its aid efforts. Its
interventions have been intense and intentionally visible – so
visible that for one Somali
resident “Turkey has become the McDonald’s of Mogadishu.
Their flags are everywhere, just like the yellow arches of McDonald’s
are everywhere in America.” Humanitarian action under a Turkish
flag is meant to demonstrate Islamic solidarity and virtue, to
enhance Turkey’s political and diplomatic standing, and not least
to raise revenues through public donations. In recent years, Syria –
that is, support of Syrian refugees in Turkey – accounted for well
over half of Turkish aid worldwide, which includes charitable
donations raised through government sponsored telethons. A
highly-publicised case of humanitarian action was the 2010 ‘Gaza
Freedom Flotilla’: six Turkish ships carrying hundreds of activists
and thousands of tons of relief goods attempted to breach the
blockade of Gaza, but were stopped, with deadly violence, by Israeli
commandos.

Gulf
monarchies have for many decades used their aid for political,
diplomatic and cultural ends, usually to the satisfaction of key
allies in the west.
In the 1970s, the demise of secular pan-Arab nationalism was at
least in part a result of Saudi Arabia’s skilful use of its money.
It routinely bolstered autocratic regimes in Egypt and Morocco and
bankrolled small anti-communist wars such as Siad Barre’s incursion
into Ethiopia and the Mujahidin’s campaign in Afghanistan. It
fortified Muslim inter-state relations pivoting on itself, notably in
the creation of the Organisation of Islamic Cooperation. And for the
time being it has helped contain popular upheavals from 2011 to 2013
across the Arab world.

Less
satisfactory for western allies is the powerful impact of aid used to
diffuse a particular brand of conservative,
yet militant, Islam. Today, however, a kind of ‘buyer’s
remorse’ is detectable in the Gulf and beyond, since a nihilistic
militancy – the ‘blowback’ from decades of investment in
Salafist/Wahhabi missions, schools and media – has become a
nightmarish threat to the monarchies and their allies.

The
patterns noted here – aid as a seeding-mechanism for business
interests, and especially as a tool of statecraft to gain prestige,
build coalitions and inter-state institutions, and to promote a
transnational ideology – are also commonplace in the aid
mainstream. The spontaneous, rapid and fluid practices of the Gulf
monarchies and Turkey as donors, especially for political ends, would
normally meet disparagement from the donor mainstream. Yet some
established donors may be giving such practices a second look. In its
latest flagship
report
the World Bank encourages aid
strategists to move beyond technocratic approaches and to take
domestic and international politics seriously. In that new
perspective, Turkey
and Gulf monarchies
in their savvy, if reactionary, use of aid may have stolen a march on
western citadels of donor power.

About the author

David Sogge works as an independent scholar based in Amsterdam, where he is affiliated with the Transnational Institute. He writes for OpenDemocracy and many other publications. Further observations on aid appear in his book 'Give and Take. What’s the Matter with Foreign Aid' and in articles such as ‘Donors Helping Themselves.’

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